As we head into the peak of hurricane season, taxes are most likely not your highest priority. But, as with any potential disaster, it’s incredibly important for taxpayers to protect records and key documents—not only for your peace of mind but to aid in any recovery efforts that may be needed in the future.
After a natural disaster, reconstructing records could be required for tax purposes, federal assistance, or insurance reimbursement. And while we hope they are not necessary, proactive steps lessen frustration and hardship after the storm.
Step 1: Protect vital records, tax, and financial documents.
Whether you are staying put or evacuating your home, securing key documents is a crucial step to ensure financial security. Take extra care with paper documents by placing them in plastic zippered bags and storing them in a portable, waterproof safe.
Here are the key documents you want to have on hand and protected in a waterproof container:
Social Security card
Proof of residence (deed or lease)
Insurance policies
Birth certificates
Other documents to safeguard include:
Marriage certificates
Tax records for previous and current tax years
Titles, wills, and deeds
Banking and financial statements
Step 2: Use electronic records.
When in doubt, duplicate your records electronically. Scanning paper documents or uploading statements from online accounts onto a flash drive, secure online storage platform, or portable hard drive is the safest way to keep an archive of your records.
IRS Revenue Proclamation 97-22: Scanned receipts are acceptable as long as they are identical to the originals.
Documents you may want to store electronically include:
Bank statements and financial documents from your financial institution
Tax returns, W-2s, and payroll records
Step 3: Document valuables and business equipment.
As an extra precaution, take a moment to video or take pictures of your belongings—especially any higher-value items and equipment. Photos, videos, or personal items in your home or business equipment can provide proof for insurance claims and loss claims on tax returns.
In addition to insurance claims, you can also claim a deduction for casualty loss for property damage from a disaster. Personal casualty deductions can only be claimed for losses attributable to federally declared disasters. The casualty loss is reduced by the amount of insurance reimbursement or expected reimbursement.
The IRS provides a disaster loss workbook to help individual taxpayers maintain a record of their property—Publication 584: Casualty, Disaster, and Theft Loss Workbook. (Note: Use Form 4684 for Casualties and Thefts of personal property.)
Step 4: Be prepared and stay safe.
We hope our clients stay safe from any severe weather events that we may experience this season.
Need further assistance? Give us a call at 985-727-9924—our expert team of CPAs is always ready to help.